Best buy savings rates: Why it is now worth chasing the top deals

In the US, storm chasing is a hobby for some thrill-seeking individuals who like to put their neck on the line to track them down, mainly in the hope of spotting a mega tornado.

It was brought to life, and to the attention of many, in the 1996 Hollywood blockbuster Twister starring Helen Hunt and Bill Paxton – the spinning cow becoming an instant magic movie moment.

What does this have to do with savings rates? Well, I want to visualise yourself strapping into a 4×4 and going full throttle to track down a storm – only, the 4×4 is your laptop, mobile or tablet, and the storm is a wave of a fresh new savings deals blipping on your radar.

If it helps, you can even find some movie music to put in the background to really feel the part.

Rate chase: Sure, the thrill of finding a better home for your savings might not be as big as spotting a mega twister – but at least it’s safer

You see, our independent best buy tables have been more like a disaster flick than a thrill-seeking adventure movie in the last 18 months – deserted streets, an eerie feeling of impending doom.

But in recent weeks, there has finally been a revival, led by challenger banks you may not have heard of – unknown stars, rather than the glitter A-listers you know, love or loathe.

In the fixed-rate stakes, it has been like a thrilling car chase scene, with one provider taking the lead, being closely tailed and then another nudging past.

Take for instance SmartSave. Yesterday, it bumped up its one year rate by 0.03 percentage points to 1.39 per cent, to surpass Allica Bank paying 1.38 per cent.

Then Zopa pumped its rate to 1.4 per cent in the afternoon, before SmartSave went to 1.41 per cent in the evening. 

It’s important for these challengers to top the charts in order to attract large swells of cash and it’s noteworthy, because this type of move hasn’t happened since pre-pandemic.

It’s doubly noteworthy given the fact best buy rates had slipped below 1 per cent for the first time ever. We now have 16 choices in our tables – from Atom to Zopa Bank, a real A-Z.

It’s a similar story elsewhere. The top two-year rate, after a bit of competition, is now 1.66 per cent.

While in the easy-access stakes, for a large chunk of time, the top rate was 0.5 per cent. There are now five banks paying this, including a top 0.65 per cent from Tandem Bank.

Cash Isas have not been left behind, they too are heading higher. For an easy-access, Cynergy Bank matches that 0.65 per cent – while in the fixed-rate stakes, deals lag behind their tax-free rivals, but there are green shoots that at least they’re heading in the right direction.

Now, I’m not saying these rates will get your pulses racing as much as a suspense movie – but they are a step in the right direction, the protagonist making the right moves to reach the ending we all want.

Everyone should have a rainy day pot, and savings accounts are still the best place for this. It prevents having to tap into investments in an emergency, or it being eaten up in a current account by everyday spending.

Many of us are guilty of still holding money in legacy accounts – essentially, big banks paying as little as 0.01 per cent to house your cash. Billions is saved this way.

Many of us are also guilty of shrugging, and thinking ‘moving my money for a 0.65 per cent rate or a 1.41 per cent rate feels pointless, especially with inflation at 2 per cent’.

How to find the best savings rates

Savings rates have been in the doldrums for a while and exacerbated by the pandemic.

But there are ways to ensure your cash is in the best of the bunch at all times. 

Over the past few years a number of savings platforms have launched, offering savers the option to switch as and when better deals become available. 

They each work slightly differently and include their own exclusives. To check out what’s on offer take a look yourself:

> Hargreaves Lansdown Active Savings

> Raisin 

> Flagstone  

Or you can view This is Money’s comprehensive best buy savings tables here, independently curated by savings guru Sylvia Morris:

> Compare best savings rates now 

The thing is, that is a 64x or 140x boost on your rainy day returns by clicking a few cursors on a screen and voting with your feet. No, it won’t make you rich – but could help stimulate more competition, a virtuous upward cycle. 

On £5,000 for example, that’s the difference between 50p, £32.50 or £71 interest. It takes a few minutes to open a new account and subsequently move the cash – if it makes it easier, think of it in terms of an hourly wage or £70 of notes slipping from your wallet into the drain.

Or think of it as a loyalty penalty. If your insurer renewal quote was £70 more than the previous year, you’d likely question it and shop around elsewhere. 

Make it part of your evening, while you’ve got yet another binge-watching box set on the go in the background. 

You can treat it like killing the big beast in a horror movie if you like, moving the cash to a challenger bank that is at least competing.

There are caveats to this. Make sure your money is heading to a provider with crucial Financial Services Compensation Scheme protection (which all in our tables have).

Do your research on the bank you plan to move your cash to. What does it intend do with your money? Lend out as personal loans, business financing, car purchases, mortgages…

Lastly, get a measure of its customer service – online reviews are a good place to start, and calling its customer service helpline to gauge how quickly they answer. 

Smaller challengers sometimes can be swamped with new customers and money – indeed, it can happen to the big boys, as National Savings and Investments showed last year.

Three in five savers who were asked by Coventry Building Society ‘what would make them move provider’ answered better rates on offer elsewhere, suggesting a large chunk do have the appetite to move, while half said poor service.

But on the flipside of the 2,000 people that were surveyed, 43 per cent said convenience is the joint most common reason for savers to stay loyal to a provider, together with good service.

Don’t be the cash cow caught in the twister – be the hero at the wheel, the top rate being the mega tornado you’ve been hunting for.